Bharti Telecom to Become Debt Free After Selling Stake in Airtel

CIOReviewIndia Team | Wednesday, 27 May 2020, 09:12 IST

                              Bharti Telecom to Become Debt Free After Selling Stake in Airtel

Bharti Telecom Limited (BTL) has sold a 2.75 percent stake in Bharti Airtel to foreign and local investors. Those who have bought stake are overseas investors like Blackrock, Fidelity, Segantii Capital, Norges Bank and Key Square Capital, and local ones such as HDFC Mutual Fund and SBI Mutual Fund, as per a report by Economic Times. “On the back of such a strong demand from international and domestic investors, the amount raised was increased to around $1.15 billion (compared with $1 billion initially planned),” said Harjeet Kohli, Group Director, Bharti Enterprises, in a statement on Tuesday. He added, “With the proceeds, BTL will become a zero-debt company, providing an even stronger financial flexibility and capacity to provide any additional shareholder support as may be desired by Bharti Airtel from time to time.”       

According to a statement given by BTL, the allocation was doled out to over 50 accounts, with the top 10 amounting to two-thirds of it. After the deal, BTL’s stake in Bharti Airtel has whittled down to around 36 percent. The stake sale also brought down the effective shareholding of SingTel and the Mittal family to less than 32 percent from 33.3 percent and to about 24 percent from 25.7 percent, respectively. “Bharti Group and Singtel, as Bharti Airtel’s largest shareholders remain committed to the business and the long-term prospects of Bharti Airtel,” said the company. It also added that recently, the promoters had invested more than Rs 21,000 crore in Bharti Airtel and that they stayed fully committed to investing further in the business as may be required.

“BTL’s 2.75 percent stake sale in Airtel is mainly to de-lever its balance sheet as dividend payments from the telco are insufficient to service its Rs 8,500 crore debt,” brokerage Jeffries said in a note. It cited the inevitability of BTL stake sale in Bharti Airtel as around Rs 6,800 crore of its debt is lined up for repayment next fiscal. BTL said the stake sale proceeds will repay its debt, which was raised in order to finance the acquisition of Bharti Airtel equity shares in the past. As BTL becomes debt free, the credit profile of Bharti Airtel’s will be amplified as it would profit from deleveraging on a consolidated basis.

The stake sale comes at a time when there have been numerous fundraisings by Jio Platforms, the parent company of Bharti Airtel’s biggest rival, Reliance Jio Infocomm. Jio Platforms has closed several deals to raise Rs 78,562 crore from a host of investors, including Facebook, Silver Lake, Vista Equity Partners, General Atlantic and KKR.

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